THE mining industry expects to make a strong comeback this year driven by brisk investments, keen interest from major global players, higher commodity prices and more stable investment policies in place, a top industry official said.

"We're off to a good start this year," said Benjamin Philip Romualdez, president of the Chamber of Mines of the Philippines.

The industry had suffered a setback last year amid strong anti-mining sentiment and foreign investor uncertainty over the government's investment policies. But a turnaround looks imminent.

For this year alone, several mining firms have already committed to invest at least $500 million to jumpstart their exploration projects here, Romualdez told XFN-Asia.

These include London-listed miner Xstrata Plc., which exercised its option to acquire a 62.5 percent controlling stake in the Tampakan copper-gold mine project in southern Philippines from its current owner Indophil Resources.

Indophil managing director Tony Robbins told XFN-Asia that by March, Xstrata Plc. will assume management of the $2 billion project and solely fund the Australian $30-million, final pre-feasibility study of the mine to be completed late this year or early 2008.

The Tampakan deposit is one of the largest undeveloped copper-gold deposits in Southeast Asia.

Fresh investment will also come from the joint venture of Climax Mining and Oceana Gold Ltd. of New Zealand, which will spend $100 million for the construction of mine facilities for the Didipio copper-gold project in Nueva Vizcaya.

Japan's Sumitomo Corp. is putting in $210 million to expand its nickel refinery plant in Palawan, while Atlas Consolidated Mining and Development Corp.'s unit Carmen Copper Corp. is raising $100-million in loans to fund the rehabilitation of its copper mines in Cebu in central Philippines.

Romualdez said given brisk foreign interest, investment in the country's mining sector could go up to as much as $7 billion over the next 10 years -- if the 24 priority projects of the government all push through.

"The mining industry is getting noticed anew by big consolidating transnational companies, and with more of these mergers expected, the Philippines will likely be a beneficiary of these developments."

Romualdez recently led local industry leaders in briefing officials of Brazil's Companhia Vale do Rio Doce (CVRD), the world's third largest mining company which last year bought Inco of Canada for $17 billion.

The official said CVMR, which has already established two companies here (CVMR Resources Phils and CVMR Exploration and Development Phils) is currently negotiating supply contracts with at least five Filipino nickel mining companies.

While renewed interest in the Philippine mining industry is being helped along by favorable metal prices, growing demand from India and China as well as better government policies, Romualdez stressed that investors were primarily attracted by the country's rich mineral resources.

"Current metal prices have created a euphoria around the world but, at the end of the day, the main basis for investor interest is that the geology of the Philippines is superior to other mining prospects in the world.

"We have the same challenges as other countries involved in mining, but the bottom line is that investors will go where it makes sense to develop a mine," he said.

Studies by the Department of Environment and Natural Resources show that about nine million hectares of mining sites across the country have high potential for mineral deposits, which equates to about 30 percent of the country's land area of 30 million hectares.

The industry hopes to further spark the interest of foreign investors when it holds the Asian Pacific Mining Conference in Manila this March. The meeting had been postponed last October following confusing signals from the government, which, industry leaders feared, could turn foreign investors away permanently. Mining companies have submitted a long list of concerns to President Gloria Arroyo, complaining about the ban on new mining projects outside of the 24 priority projects, the tedious process of getting permits, persistent lobbying in Congress to repeal the mining law and curbing fiscal perks for miners.

"But most of the big hurdles have been removed," Romualdez said as he predicted a major recovery in the industry this year after last year's controversial mine tailings spill on Rapu-Rapu Island, south of Manila, by Australian firm Lafayette Mining Ltd. After more than a year of suspension and after being made to comply with rigid environmental standards set by the government, Lafayette will finally resume its base metals operations next month.

"The potential of the mining industry is bigger compared to the business process outsourcing sector, because of the huge investments required," Romualdez said. Indophil's Robbins said foreign investors "remain optimistic about the prospects of the Philippine mining industry" although a rapid pace of development cannot be expected "because these are long-gestating projects."

"But as long as the message is clear that the investment rules are stable, the country will become more attractive for miners," Robbins said. ($1= P48.87)